Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:10 AM EST
S&P 500: +2.50; 1,434.00
NASDAQ 100: +2.00; 1,790.00
Dow: +6.00; 12,422.00
NIKKEI 225: +0.14%; 17,287.65 (+23.71)
HANG SENG: -0.11%; 19,800.93 (-20.85)
S&P/ASX 200: +0.57%; 5,995.00 (+34.10)
BSE SENSEX 30: +0.71%; 13,072.10 (+92.44)
FTSE 100: -0.31%; 6,304.70 (-19.50)
CAC 40: -0.10%; 5,625.74 (-5.79)
XETRA-DAX: +0.22%; 6,912.09 (+15.01)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.79%; $66.55 (+$0.52)
Gold: +0.21%; $669.00 (+$1.40)
Natural Gas: +0.97%; $7.68 (+$0.07)
Silver: +0.49%; $13.405 (+$0.065)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Global Payments Beats By a Penny; Raises Guidance for FY2007
Electronic transaction processor Global Payments Inc. reported net income slightly above analyst expectations and raised its earnings forecast for FY2007 by $0.05 on the lower end of the range. By the numbers, Global Payments reported net income of $34.3 million, good for EPS of $0.42 after one-time items, versus a profit of $30.1 million (EPS of $0.36) during the prior-year period. Revenue also rose to $260.4 million, up from $225.2 million a year earlier. Thomson Financial estimates predicted EPS of $0.41 after one-time expenses on revenue of $264 million. The company raised its outlook after items for FY2007 to a range of $1.74 to $1.76 per share, up from an earlier prediction of $1.69 to $1.75, for fiscal 2007, while lowering its revenue expectations to a range of $1.050 billion to $1.057 billion, down from a previous forecast of $1.057 billion to $1.069 billion. Analysts expect earnings of $1.73, excluding exceptional items, on revenue of $1.064 billion.
Sources: Press Release, MarketWatch (i), (ii), Reuters
Commentary: Global Payments: At The End Of Its Run? [April '06]
Stocks/ETFs to watch: Global Payments Inc. (GPN). Competitors: First Data Corp. (FDC), Total System Services (TSS)
Toyota Increases Tundra Discounts, Struggles to Learn Truck Segment
The New York Times reports that Toyota Motor Company has unexpectedly increased incentive discounts on its new full-size pickup, the Tundra. This week dealers began offering a $1,000 trade-in incentive that when combined with other discounts can shave up to $3,000 off the truck's price tag. The Times calls the move "another sign that it is not cutting into the profitable truck market as much as rival automakers had feared," citing analysts' surprise to see such aggressive discounts on a model not yet two months old. But Denise Morrissey, Toyota spokeswoman, downplays their significance, saying the discounts are "just part of how you do business... In the truck segment, the customers really do expect them... This is our first real foray into this segment. When in Rome, you know..." The Times says the incentives are welcome news among U.S. companies like GM and Ford, who have dominated the pickup market until now -- despite their continued insistance that they are not worried about losing sales to Toyota. The incentives bring Tundra prices in line with its competitors the Chevy Silverado and Ford F-series. Last week the Tundra suffered a setback when it received a 4-star rating in frontal crash tests, one star less than all competing U.S. models.
Sources: New York Times
Commentary: No Tough Times For Toyota • Toyota: Running Over the Competition • Toyota Comments on U.S. Sales Outlook, Denies Tundra Production Cut
Stocks/ETFs to watch: Toyota Motor Corp. (TM). Competitors: General Motors Corp. (GM), Ford Motor Co. (F), DaimlerChrysler (DCX), Honda Motor Co. (HMC). ETFs: iShares Dow Jones Transportation Index ETF (IYT)
U.S. Steel to Acquire Lone Star Technologies for $2.1B
United States Steel Corporation announced yesterday it has entered a definitive agreement with Lone Star Technologies, to acquire it for $67.50 per share (total $2.1 billion) in cash. The boards of both companies approved unanimously. The deal is expected to close in Q2 or Q3 this year, pending shareholder and regulatory approval. U.S. Steel says the deal will be accretive to '07 EPS, with $100-plus million in annual pre-tax operating synergies by the end of next year. The $67.50/share represents a 39% premium to Lone Star's $48.45 close on Wednesday. The Wall Street Journal notes U.S. Steel will become the largest producer of tubular steel in N. America and will have broader offerings to oil and natural gas drillers. A metals analyst with Bradford Research is quoted saying some thought U.S. Steel would sell its tubular business, but now with the Lone Star deal, U.S. Steel itself becomes tougher to acquire, in light of the industry's recent wave of global consolidation. U.S. Steel's shares rose 3.7% to $101.22 yesterday, establishing a new all-time high. Lone Star jumped 36.5% to $66.11, also an all-time high.
Sources: Press release, The Wall Street Journal
Commentary: Jim Cramer's Take on United States Steel • U.S. Steel Q4 Profit Beats Street on Higher U.S. Prices, EU Demand • Lone Star Technologies is More than a Pipe Dream [Sept. '06]
Stocks/ETFs to watch: United States Steel (X), Lone Star Technologies (LSS). Competitors: Mittal Steel (MT), Nucor (NUE), AK Steel Holding (AKS). ETFs: Market Vectors - Steel (SLX), SPDR Metals and Mining (XME)
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Asian Headlines (via Bloomberg.com)
• Asian Stocks Rise on Japanese Economic Reports; Mizuho Financial Advances Asian stocks rose, led by Mizuho Financial Group Inc. (MFG), after industrial production and household spending reports in Japan boosted confidence in the growth outlook for the region's biggest economy.
• Babcock Trumps Larger Rival Macquarie Bank With $6 Billion Alinta Purchase Babcock & Brown Ltd., Australia's second-largest securities firm, will clinch its biggest deal with the A$7.4 billion ($6 billion) takeover of Alinta Ltd., defeating number-one competitor Macquarie Bank Ltd. in the process.
• Japan Industrial Output Falls Less Than Expected; Household Spending Gains Japan's household spending rose at double the pace forecast by analysts last month and industrial production fell less than expected, suggesting the world's second-largest economy can weather a U.S. slowdown.
• Nan Ya Plastics Has Biggest Profit Gain in Two Years on Electronics Demand Nan Ya Plastics Corp., the world's largest processor of plastics for pipes and imitation leather, posted the biggest profit gain in two years because of higher earnings from investments in the electronics business.
European Headlines (via Bloomberg.com)
• Stocks in Europe Fall Before U.S. Spending Report, Paced by Barclays, BP European stocks fell, heading for the worst first-quarter performance since 2003, on concern personal spending may be slowing in the U.S.
• Kohlberg Kravis, Pessina Increase Bid for Alliance Boots to $19.8 Billion Kohlberg Kravis Roberts & Co. and Italian billionaire Stefano Pessina raised their bid for Alliance Boots Plc (ABOYY.PK) to 10.1 billion pounds ($19.8 billion), and the U.K.'s largest drugstore chain indicated it may discuss a deal.
• Europe Confidence Unexpectedly Rises to Six-Year High; Jobless Rate Drops Confidence in the European economy unexpectedly rose to a six-year high and unemployment fell to a record low, giving the European Central Bank scope to raise interest rates further in the 13-nation euro region.
• Man Group to Sell Brokerage Unit to Public to Focus on Money Management Man Group Plc, the world's largest publicly traded hedge fund company, plans to sell its futures brokerage unit in an initial public offering this year to concentrate on money management.
• Ryanair's Proposed Bid for Aer Lingus Harms Competition, EU Regulator Says Ryanair Holdings Plc's (RYAAY) proposed purchase of Aer Lingus Plc would harm competition by creating a dominant carrier in Ireland and eliminating rivalry between the airlines to start new routes, European Union regulators said.